Japan, EU to study economic partnership agreement
THE ASAHI SHIMBUN
Japan, EU to study economic partnership agreement
08/29/2007
To keep pace with South Korea, Japan will start joint research with the European Union as early as next month on a possible economic partnership agreement, sources said.
Private-sector experts will conduct joint studies before the Japanese government decides whether to enter into EPA negotiations.
The decision to consider an EPA with the EU reflects Tokyo’s concerns that Japan could be left behind South Korea, which started talks on a free trade agreement with the EU in May.
Japanese companies fear they would be put at a considerable competitive disadvantage against their South Korean rivals if the EU lifts tariffs on South Korean imports.
The EU, Japan’s second-largest export market after the United States, imposes a 10-percent tariff on automobiles and a 14-percent tariff on flat-panel TVs.
Japanese and South Korean companies compete globally, particularly in autos and electronics.
The joint research will be conducted by a study panel set up by the Japan-EU Business Dialogue Round Table, which groups Japanese and European businesspeople.
The panel is expected to compile a report by the time the Group of Eight summit is held in Hokkaido in July 2008, the sources said.
The report to be submitted to Japanese and European government leaders at the summit is expected to encourage them to enter into EPA negotiations, the sources said.
Nippon Keidanren (Japan Business Federation) and its European counterpart will back the study panel’s research. The Ministry of Economy, Trade and Industry and the Japan External Trade Organization (JETRO) will also provide support.
At a news conference Monday, trade minister Akira Amari described the envisaged FTA between South Korea and the EU as a "threat" to Japan.
As for a Japanese EPA with the EU, Amari said "the sooner the better."
South Korea and the EU are expected to agree on an FTA by the end of the year. The two partners have already agreed to abolish tariffs on 95 percent or more of trade between them in terms of both value and number of items.
South Korea also agreed on an FTA with the United States in April.
In 2006, Japan’s exports to the EU reached about 10.8 trillion yen ($98.4 billion) while the imports came to about 6.9 trillion yen.
The joint research will study hurdles that should be cleared before an EPA is signed and the economic effects the accord would bring.
In addition, the study panel will look into the possibility of building a closer economic relationship than one achieved through a conventional FTA or EPA, the sources said.
For example, the panel will study the possible introduction of common government regulations, harmonizing technical standards and enhancing cooperation in global environment issues, the sources said.
The agricultural sector is expected to be a major sticking point in future negotiations.
Opposition from politicians will be inevitable to trade liberalization, particularly after the Liberal Democratic Party’s disastrous showing in rural constituencies—its traditional stronghold dominated by farming households—in the July 29 Upper House election.
